Note 9 - Income Taxes

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. INCOME TAXES

Components of income before income taxes are as follows (in thousands):

	Year Ended December 31,
	2024			2023		2022
United States	$	25,201		$	18,472	$	15,777
Foreign		(398	)		39		(192	)
Income before income tax provision	$	24,803		$	18,511	$	15,585

The provision for income taxes is comprised of the following (in thousands):

	Year Ended December 31,
	2024			2023			2022
Current federal	$	4,712		$	4,066		$	1,972
Current state		1,184			942			923
Current foreign		14			15			(110	)
Deferred federal		(827	)		(1,493	)		495
Deferred state		(223	)		(214	)		239
Deferred foreign		(64	)		(18	)		(25	)
Provision for income taxes	$	4,796		$	3,298		$	3,494

A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the accompanying Consolidated Statements of Income is as follows (in thousands):

	Year Ended December 31,
	2024			2023			2022
Federal tax provision at the statutory rate	$	5,187		$	3,887		$	3,274
State income tax provision, net of federal benefit		710			528			975
Tax credits		(1,284	)		(1,197	)		(1,227	)
Change in valuation allowance		52			3			51
Adjustments for prior year taxes		(36	)		(19	)		(261	)
Changes in uncertain tax positions		160			167			767
Other		7			(71	)		(85	)
Provision for income taxes	$	4,796		$	3,298		$	3,494

Management periodically assesses the realizability of its deferred tax assets, and to the extent that a recovery is not likely, a valuation allowance is established to reduce the deferred tax asset to the amount estimated to be recoverable. At December 31, 2024, the Company has a valuation allowance of $1.9 million recorded against deferred tax assets for state net operating losses and certain foreign deferred tax assets.

As of December 31, 2024, the Company had federal, state, and foreign net operating loss carryforwards of $1.2 million, $7.2 million, and $7.8 million, respectively. Certain losses have an indefinite carryforward period, while other loss carryforwards will expire in years 2030 through 2044. A portion of the net operating loss carryforwards are subject to annual limitations under Internal Revenue Code Section 382. The annual limitations could result in the expiration of net operating loss and tax credit carryforwards before they are fully utilized. The Company is subject to income taxation at the federal, foreign, and various state levels. The Company is no longer subject to U.S. federal tax examinations for tax years before 2021, and with few exceptions, the Company is not subject to examination by foreign or state tax authorities for tax years which ended before 2021. Loss carryforwards and credit carryforwards generated or utilized in years earlier than 2021 are also subject to examination and adjustment.

A reconciliation of the beginning and ending liability for gross unrecognized tax benefits are as follows (in thousands):

	December 31,
	2024			2023
Balance at beginning of year	$	1,160		$	1,036
Additions for tax positions in current year		319			298
Reductions for tax positions of prior years		(173	)		(174	)
Reductions for payments for tax positions of prior years		(166	)		—
Balance at end of year	$	1,140		$	1,160

Unrecognized tax benefits included tax positions of $1.1 million and $1.1 million for the years ended December 31, 2024 and 2023, respectively, that if recognized would impact the Company’s effective tax rate. 

Significant components of deferred tax assets and deferred tax liabilities are as follows (in thousands):

	December 31,
	2024			2023
Deferred tax assets:
Allowance for credit losses	$	316		$	202
Accrued liabilities		681			1,013
Capitalized software development		2,916			—
Lease liability		5,097			5,931
Tax credits		557			467
Stock-based compensation		1,267			1,161
Deferred revenue		451			628
Net operating loss carryforwards		2,595			3,282
Total deferred tax assets		13,880			12,684
Less: Valuation allowance		(1,900	)		(1,992	)
Deferred tax assets, net of valuation allowance		11,980			10,692
Deferred tax liabilities:
Deductible goodwill		7,796			6,829
Nondeductible intangible assets		1,741			2,087
Right of use assets		4,410			5,130
Prepaid assets		11,156			10,285
Capitalized software development		—			181
Property and equipment		1,425			1,914
Basis difference on investments		48			151
Total deferred tax liabilities		26,576			26,577
Net deferred tax liabilities	$	14,596		$	15,885